The blockchain is a type of technology that makes it possible to store, process, share and manage any type of information in a publicly accessible database. In a continuous list of data records (called blocks) these are linked by means of cryptography. The beginning of any blockchain is the creation block, or rather the genesis block.
The starting point of blockchain technology is to shift the control of monetary values or information. Control over monetary values and information is decentralized. This means that the information that a bank has at its disposal is made publicly available to everyone. Here are the functional principles of blockchain:
For this reason, the accounts within a blockchain are anonymized. Each account has its own address, which consists of a sequence of numbers and letters. This way, while everyone can look at each account and see how much money is being transferred to the account or transferred from that account, and what the current balance looks like, the account cannot be assigned to a real person. A blockchain is usually used anonymously.
The anonymity of the users of the blockchain is removed when the public address can be assigned to a name. If this is the case, all further transactions of the person can be viewed from the public address and anonymity gives way to a weakened form - pseudonymity.
Furthermore, the information about individual accounts is no longer stored centrally. The blockchain, viewed as a book of accounts, is stored within a decentralized computer network. This means that many different computers around the world are connected to one another via the Internet. Each of these computers stored the entire ledger.
If an account holder opens his blockchain on his computer and finds an amount that he doesn’t have, other account holders can automatically detect the fraud. Because they can check the account book on their computers to see whether an account holder actually has the amount in his account.
This way, fraudsters are quickly identified. Fraudsters can be identified via the decentralized network by comparing the respective blockchain versions and excluded from the network. In the same way, a bank's customers could see when their own money is being used for wrong purposes by their banker. This creates security. Anonymity, decentralization and security are three important characteristics of blockchain technology. Hyperlink InfoSystem can help you utilize blockchain technology in your projects.
There are several exciting features of blockchain, but among them is "immutability" which is undoubtedly one of the key features of blockchain technology. Blockchain technology works a little differently than a typical banking system. Instead of relying on centralized governance, it provides blockchain functionality through a series of nodes.
The network is decentralized, which means it doesn't have any governing body or one person overseeing everything. Rather, a group of nodes maintains the network by making it decentralized.
This is one of the key features of blockchain technology that works great. Blockchain puts us in a clear position. Since the system does not require any governing bodies, we can access it directly from the Internet and store our assets in it.
Since there is no need for central authorities, no one can simply change any characteristics of the network in their favor. The use of encryption provides another layer of security for the system.
Combined with decentralization, cryptography provides users with another layer of protection. Cryptography is a fairly complex mathematical algorithm that acts as a firewall against attacks.
Usually, the public ledger provides all the information about the transaction and the participant. Everything is open, nowhere to hide. When it comes to private or federated blockchain, things are a little different. But, nevertheless, in these cases, many people can see what is really going on in the ledger.
Every blockchain thrives on consensus algorithms. The architecture is intelligently designed and consensus algorithms are at the heart of this architecture. Each blockchain has a consensus to help the network make decisions.
Traditional banking systems are quite slow. Sometimes it may take several days for a transaction to be processed after all settlements are completed. They can also be damaged quite easily. Blockchain offers faster settlement compared to traditional banking systems. Thus, the user can transfer money relatively faster, which saves a lot of time in the long run.
Modern blockchains, in particular, offer the possibility of developing smart contracts. These are intelligent scripts that automatically initiate transactions on the blockchain. This option provides a great added value for insurance companies, as the processing of claims or insurance benefits can be addressed in an automated and secure manner.
To date, money laundering is a major problem. The blockchain can be used to eliminate this problem by transparently storing all concluded contracts on a blockchain. Through recordings, the individual transactions can also be assigned to the respective participants, and thus money laundering can be avoided.
Verifying a person's identity is a challenge in selected business areas. With the help of blockchain technology, however, people's identities can be identified more securely and more quickly than before. The basis for this is extensive databases that enable identification and verification. Above all, existing identification documents - driver's licenses, passports, and ID cards - could thus be digitally implemented securely. A manipulation would also be almost impossible. Loss of data would also be prevented because the data is stored decentrally.
A blockchain can be configured so that only selected users have access to the stored data. Nevertheless, the data can be stored in the distributed network so that the sensitive data can be stored here. In particular, personal documents such as patient files, medical reports, and the course of illness can be saved on a blockchain.